While creating a strong moat, high switching costs make it difficult to acquire new customers from competitors who enjoy the same advantage. This industry-wide customer inertia can severely limit a company's growth potential.

Customers approved your price when they purchased. If they later cancel citing cost, it means the product failed to deliver the value they expected for that price. The real problem to solve is the value gap, not the price itself.

Help Scout shifted from per-seat to per-contact pricing, believing it was a superior value metric. However, customers rejected the change due to the perception of less control over costs, even when the new model would have saved them money. Market inertia and psychology trumped logical value.

Incumbent software like Workday creates immense stickiness, not through love, but through deep integration and high switching costs. This creates a 'Hotel California' effect where customers 'can check out any time they like, but they can never leave,' a moat that only a 10x better alternative can breach.

When customers balk at high usage bills, shift the conversation from cost control to strategic outcomes. Frame the expense as the price for getting a product to market months earlier, capturing significant market share worth millions.

Enterprise buyers are hesitant to adopt new AI tools due to unclear, consumption-based pricing from vendors like ServiceNow. Lacking transparency on how 'meters' work or what future usage will cost, customers fear 'locked-in cost increases' and a new form of vendor lock-in, which is slowing down sales cycles.

The ability for customers to build their own software features using AI agents directly threatens the traditional SaaS upsell model. During negotiations, customers can now credibly threaten to "roll their own" features instead of paying for higher-priced tiers, weakening the vendor's pricing power.

When AI agents are connected to legacy software like Marketo, they hit API limits and performance issues. The agents themselves then effectively recommend leaving that vendor for more modern platforms, becoming a driving force in tech stack decisions.

The most defensible businesses, especially in enterprise software, create such high switching costs that customers are essentially locked in. This "hostage" dynamic, where leaving is prohibitively difficult, is a stronger moat than simply having satisfied customers who could still churn. It's the foundation of an enduring software business.